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SEGMENT REPORTING
 12 Months Ended
Dec. 31, 2024
Segment Reporting [Abstract]  
SEGMENT REPORTING
15. SEGMENT REPORTING
The Company’s operating segments are aggregated into reportable segments only if they exhibit similar economic characteristics and have similar business activities.
The Company now has three operating segments: “Digital Asset Self-Mining”, consisting of performing digital asset mining for its own account; “Digital Asset Hosted Mining”, consisting of providing hosting services to third-parties for digital asset mining; and “HPC Hosting”, consisting of providing hosting services to third parties for GPU-based HPC operations. The Company’s HPC operations met the criteria to be considered a new segment during the second quarter of 2024. The Digital Asset Self-Mining segment generates revenue from operating owned digital infrastructure and computer equipment as part of a pool of users that process transactions conducted on one or more blockchain networks. In exchange for these services, the Company receives digital assets. The Digital Asset Hosted Mining business generates revenue through the sale of consumption-based contracts for its digital asset hosted mining services which are recurring in nature. The HPC Hosting business generates revenue through licensing agreements and orders with licensees that include fixed and variable payments on a recurring basis.
The Company’s Chief Executive Officer is the chief operating decision maker (“CODM”). The CODM uses gross profit to evaluate performance and allocate resources. Gross profit is used to evaluate actual results against expectations, which are based on comparable prior results, current budget, and current forecast. Gross profit is also used in deciding how profits and cash flows will be reinvested or otherwise deployed. The Company adopted ASU 2023-07 on January 1, 2024. The most significant provision was for the Company to disclose significant segment expenses that are regularly provided to the CODM. Power fees, depreciation expense, employee compensation and facility operations expense were determined to be significant segment expenses. The CODM does not evaluate performance or allocate resources based on segment asset or liability information; accordingly, the Company has not presented a measure of assets by segment. The segments’ accounting policies are the same as those described in the summary of
significant accounting policies. The Company excludes certain operating expenses and other expenses from the allocations to operating segments.
The following table presents revenue and gross profit by reportable segment for the periods presented (in thousands):
Year Ended December 31,
202420232022
Digital Asset Self-Mining Segment
(in thousands, except percentages)
Digital asset self-mining revenue
$408,740 $390,333 $397,796 
Cost of digital asset self-mining:
Power fees160,833 165,848 144,117 
Depreciation expense108,499 88,628 212,944 
Employee compensation26,129 16,853 23,574 
Facility operations expense13,274 14,055 9,554 
Other segment items5,600 6,312 4,893 
Total cost of digital asset self-mining314,335 291,696 $395,082 
Digital Asset Self-Mining gross profit
$94,405 $98,637 $2,714 
Digital Asset Self-Mining gross margin23 %25 %1 %
Digital Asset Hosted Mining Segment
Digital asset hosted mining revenue from customers$77,554 $112,067 $242,517 
Cost of digital asset hosted mining services:
Power fees35,408 62,366 125,859 
Depreciation expense3,604 6,806 10,630 
Employee compensation4,933 6,337 20,587 
Facility operations expense2,765 5,285 8,344 
Other segment items6,848 6,451 71,411 
Total cost of digital asset hosted mining services53,558 87,245 $236,831 
Digital Asset Hosted Mining gross profit
$23,996 $24,822 $5,686 
Digital Asset Hosted Mining gross margin31 %22 %2 %
HPC Hosting Segment
HPC hosting revenue:
License fees
$17,498 $— $— 
Maintenance and other
73 — — 
Licensing revenue
17,571 — — 
Power fees passed through to customer
6,807 — — 
Total HPC hosting revenue
24,378 — — 
Cost of HPC hosting services:
Depreciation expense3 — — 
Employee compensation
2,514 — — 
Facility operations expense11,907 — — 
Other segment items478 — — 
Cost of licensing revenue
14,902 — — 
Power fees passed through to customer
6,807 — — 
Total cost of HPC hosting services21,709 — — 
HPC Hosting gross profit$2,669 $— $— 
HPC Hosting licensing gross margin
15 %— %— %
HPC Hosting gross margin
11 %— %— %
Consolidated
Consolidated total revenue$510,672 $502,400 $640,313 
Consolidated cost of revenue
$389,602 $378,941 $631,913 
Consolidated gross profit
$121,070 $123,459 $8,400 
Consolidated gross margin24 %25 %1 %
Concentrations of Revenue and Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. Credit risk with respect to accounts receivable is concentrated with a small number of customers. The Company places its cash and cash equivalents with major financial institutions, which management assesses to be of high credit quality, in order to limit the exposure to credit risk. As of December 31, 2024 and December 31, 2023, all of the Company’s fixed assets were located in the United States. For the years ended December 31, 2024, 2023 and 2022, all of the Company’s revenue was generated in the United States. For the years ended December 31, 2024, 2023 and 2022, 80%, 78% and 62%, respectively, of the Company’s total revenue was generated from digital asset mining of bitcoin from one customer. As of December 31, 2024 and 2023, substantially all of our digital assets were held by one third-party digital asset service.

For the years ended December 31, 2024, 2023 and 2022, the concentration of customers comprising 10% or more of the Company’s Digital Asset Self-Mining, Digital Asset Hosted Mining, and HPC Hosting segment revenue were as follows:




Year Ended December 31,Year Ended December 31,Year Ended December 31,
202420232022202420232022202420232022
Percent of Digital Asset Self-Mining segment revenue:Percent of Digital Asset Hosted Mining segment revenue:Percent of HPC Hosting segment revenue:
Customer
E (related party)
N/AN/AN/AN/AN/A38 %N/AN/AN/A
F1
N/AN/AN/A61 %49 %N/AN/AN/AN/A
G
100 %100 %100 %N/AN/AN/AN/AN/AN/A
H
N/AN/AN/A21 %15 %N/AN/AN/AN/A
J
N/AN/AN/AN/AN/AN/A100 %N/AN/A
1 On the Effective Date, Customer F became a minority shareholder of the Company.
A reconciliation of the reportable segment gross profit to loss before income taxes included in the Company’s Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022, is as follows (in thousands):
Year Ended December 31,
202420232022
Reportable segment gross profit
$121,070 $123,459 $8,400 
Change in fair value of digital assets(1,052)— — 
Gain from sale of digital assets
— 3,893 44,298 
Impairment of digital assets— (4,406)(231,315)
Change in fair value of energy derivatives
(2,757)(3,918)— 
Impairment of goodwill and other intangibles— — (1,059,265)
Impairment of property, plant and equipment— — (590,673)
Losses on exchange or disposal of property, plant and equipment(4,210)(1,956)(28,025)
Operating expenses:
Research and development
11,830 7,184 26,962 
Sales and marketing
9,969 7,019 12,731 
General and administrative
110,448 93,908 213,280 
Total operating expenses
132,247 108,111 252,973 
Operating (loss) income(19,196)8,961 (2,109,553)
Non-operating expenses (income), net:
Loss (gain) on debt extinguishment
487 (20,065)287 
Interest expense, net
37,070 86,238 96,826 
Fair value adjustment on convertible notes— — 186,853 
Fair value adjustment on derivative warrant liabilities— — (37,937)
Reorganization items, net(111,439)191,122 (197,405)
Change in fair value of warrants and contingent value rights1,369,157 — — 
Other non-operating (income) expense, net(325)(2,530)5,232 
Total non-operating expenses, net
1,294,950 254,765 53,856 
Loss before income taxes
$(1,314,146)$(245,804)$(2,163,409)